5 Trends Shaping the Way Advisors Do Business in 2018 Bill Crager, President

Transcription

1 5 Trends Shaping the Way Advisors Do Business in 2018 Bill Crager, President January 25, Envestnet, Inc. All rights reserved. For home office and advisor use only.

2 Agenda Introducing the New Envestnet Institute 5 Trends Shaping the Way Advisors Do Business in 2018 The New Envestnet Institute at a Glance Q&A 2

3 How to Ask a Question 3

4 EnvestnetInstitute.com: New and Improved, Now Live Registration Takes Less Than 1 Minute Sign up for FREE access to leading educational content from Envestnet and our asset manager partners 4

5 Thanks to Our Envestnet Institute Partners 5

6 5 Trends Shaping the Way Advisors Do Business in Investors Are in the Driver s Seat and You re Facing a Triple- Edged Sword 2. The Advisor Value Proposition is Evolving 3. Technology Is Set to Disrupt All Areas of Wealth Management 4. Human + Machine: The Human Advisor Remains at the Center 5. Communication With Clients Is Changing: It s Interactive, Mobile and Personalized 6

7 1. Investors Are in the Driver s Seat The Shift of Power to Investors Is Accelerating Traditional Value Chains Are Being Disrupted Control is shifting from: Manufacturers & Distributors of Financial Products Into the Hands of Consumers What you want For the price you want When you want it Where you want it Source: PwC Asset & Wealth Management Revolution: Embracing Exponential Change

8 1. Investors Are in the Driver s Seat Advisors Are Facing a Triple-Edged Sword Doing More, For More People, For Less Money 8

9 2. The Advisor Value Proposition Is Evolving Core Services Are Being Redefined Traditional Core Services Emerging Core Services Nursing Home Selection Nursing Home Selection Career Counseling Relocation Mortgages Insurance Tax Management Investment Planning CORE Retirement Planning Risk Management Estate Planning Travel Services Family Counseling Health Care Career Counseling Relocation Investment Planning Mortgages Insurance Tax Management CORE Risk Management Estate Planning Retirement Planning Travel Services Health Care Family Counseling Funeral Arrangements Funeral Arrangements 9

10 2. The Advisor Value Proposition is Evolving Suitability Client Acquisition Investable Assets Product as Solution Provider of Information Investment Consulting and Wealth Management Client Retention and Wallet Share Net Worth Individual Strategy or Plan as Solution Interpretation and Clarity Sources: GDC Research and Best Practice Research 10

11 2. The Advisor Value Proposition Is Evolving: Successful Advisors Are Meeting Client Demand for Financial Planning 11

12 3. Technology Is Set to Disrupt All Areas of Wealth Management Predictive Analytics AI-powered robotic processes will analyze public companies and other financial and nonfinancial data 58% of an adviser s occupation can be digitized via AI. Client engagement More customized and seamless 73% of year olds would try a tech firm s credit card, deposit acct, investment or mortgage already has millions of customers and could afford to set up digital accounts without nuisance fees and high minimum balances that lenders impose. Personalized Video Statements 65% of advisers use video conferencing technology. 69% of advisory firms websites are optimized for mobile use Facial Recognition Software Just 2 3 steps to onboard a new client with some online solutions. Source: PwC Asset & Wealth Management Revolution: Embracing Exponential Change 2017; Bloomberg & Financial Planning 9/13/17; InvestmentNews, Meeting clients high-tech expectations, 5/22/17; Michael Kitces Weekend Reading, September 1, 2017 RegTech via AI will reduce compliance costs through automation. Big Data 12

13 3. Technology Is Set to Disrupt All Areas of Wealth Management How Well Firms Embrace Technology Will Help Determine Future Success Comparison of Practices With Basic Technology Integration Vs. Advanced Technology Integration Practice Revenue Last 12 Months (Median, $ 000) 46% 73% $950 $950 $650 $550 Practices With > $1 MM in Revenue 100% 72% 48% 24% 25% 43% RIA Basic/No Integration IBD Advanced Integration RIA Basic/No Integration IBD Advanced Integration Source: PwC Asset & Wealth Management Revolution: Embracing Exponential Change 2017 and Aite Group, September 2016 Technology Integration Turbocharges Advisor Productivity: Making Time for Clients survey of 330 advisors in April

14 3. Technology Is Set to Disrupt All Areas of Wealth Management By 2022, the SMAC Stack Will Become Table Stakes for Investment Providers The SMAC Stack (Social, Mobile, Analytics, Cloud) Fastest Growing Technologies to 2022 Over half (53%) of providers and 59% of digital leaders surveyed plan to use a cloud platform to replace their legacy systems. ID Software Based or Biometrics Web Collaboration Software Artificial Intelligence Wearable Technology Augmented & Virtual Reality Current Use Future Use 30% 37% 19% 34% 17% 36% 23% 29% 21% 28% Contextual Marketing Software Blockchain Micro-Targeting Capab. Machine Learning Open Platforms/API Arch. Cryptography/Cybersecurity 19% 15% 19% 18% 18% 17% 28% 31% 26% 25% 24% 24% Robotic Process Automation 10% 18% Roubini Thought Lab, Wealth and Asset Management 2022: The Path to Digital Leadership. 14

15 4. Human + Machine: The Human Advisor Remains at the Center Digital Becomes a Must-Have Tool For Wealth Management Firms Challenge: The Balance Between Human Advisors & Machines Digital Advice Assets & Projections: $ Billions CAGR 2017E E: 48% $1,569 $1,215 $813 $477 $223 $45 $ E 2018E 2019E 2020E 2021E Distribution of Digital Advice Assets Incumbents: Brokers (Fidelity, TD Ameritrade) Incumbents: Other (Vanguard, Edelman) Startups (Betterment, Wealthfront) 11% 20% 67% 58% 37% 49% 67% 22% 22% 14% 26% 7% E 2021E Source: Aite U.S. Digital Advice Survey September 2017, Financial Planning November 15, 2017 Schwab s Walt Bettinger preps advisors for the wave of the future 15

16 4. Human + Machine: The Human Advisor Remains at the Center: By 2022, Advisor Will Increasingly Leverage Technology Tools to Do Business Tasks Expected to Be Handled Through Technology Vs. Humans Over the Next 5 Years Executing Transactions Technology 51% Humans 21% Client Onboarding 43% 24% Attracting New Clients 32% 27% Selecting the Best Investments 31% 27% Asset Allocation 31% 28% Insights Into Market Events 31% 28% Providing Analysis & Advice 31% 34% Source: Roubini Thought Lab, Wealth and Asset Management 2022: The Path to Digital Leadership. 16

17 4. Human + Machine: The Human Advisor Remains at the Center Human Advisors Still Do It Better, According to Investors Which of these is very important? As a % of investors who have heard about robo advisors n = 459 Who does it better? As a % of investors who have heard about robo advisors n = 459 Focused on best interests 84% 21% Robo 72% Human Takes entire financial picture into account Good investment recommendations Helps understand your investments Matches investments to risk tolerance Makes you confident about investments 81% 79% 75% 75% 72% 15% 18% 9% 29% 10% 77% 70% 91% 62% 90% Reliable in turbulent markets 69% 30% 61% Provides advice about risk 66% 10% 83% Simplifies investing process 64% 36% 57% Lowest fees 42% 63% 26% Source: September 2017 Aite Group U.S. Digital Advice: Consolidation, Fee Disruption, and the Battle of the Brands taken from the Wells Fargo/Gallup Investor and Retirement Optimism Index, May 13 through 22,

18 5. Communication With Clients Is Changing: It s Interactive, Mobile, & Customized Clients have greater input into and control over their products/services. Advisors will need to deliver customized solutions. Geography and time are becoming irrelevant in terms of servicing clients. Advisors will be challenged to add value in different ways. How Digital Technology Will Transform Client Interactions: 2017 vs 2022 Webinars + 20 pts Internet/PC - 2 pts. Web collaboration + 20 pts Face-to-face - 8 pts. Chat conversations + 19 pts pts. Video + 18 pts Smart phone/tablet + 5 pts Telephone + 5 pts Social media + 4 pts InvestmentNews, 11/4/17, Technology issues test RIAs and custodians; InvestmentNews 11/16/17 Joe Duran: How to compete in a technologically changing world; Roubini Thought Lab, Wealth and Asset Management 2022: The Path to Digital Leadership. 18

19 5. Communication With Clients Is Changing: It s Interactive, Mobile, & Customized Changing the Dynamic of Client Communication with Face-to-Screen Technology Advisors can work with their clients from anywhere; eliminates travel time Fosters collaboration with clients Ability to maintain client relationships even if they move to another locale Client conversations can be quicker, impromptu and more frequent whenever the client has questions or issues Potential to raise a firm s value proposition while lowering the time commitments of a client relationship Advisors can easily serve a specialized niche and compete for business everywhere Source: OnWallStreet, November 6, 2017 Voices Most disruptive force in planning today gets almost no notice. ce4b-dba7-afd7-ef7f037d

20 5. Communication With Clients Is Changing: Data and Online Tools Are Increasing the Personalization of Advice % of Gen X and Millennials Who Say Online Tools Can Help Make the Advisory Process More Transparent, Objective % of Consumers Who Believe Data Sharing Will Result in Increased Personalization of Advice and Services 78% 84% Source: Jefferies, August 2016 Brokers, Asset Mgrs & Exchanges Surveying the Crowd: Trends in Fin'l Advice & Implications of Online Tools, survey of 500 USbased individuals aged 25 to 50 with investable assets ranging from < $100,000 to > $1 mm Source: Accenture 2017 Financial Providers: Transforming Distribution Models for the Evolving Consumer 20

21 5 Trends Shaping the Way Advisors Do Business in Investors Are in the Driver s Seat and You re Facing a Triple- Edged Sword 2. The Advisor Value Proposition is Evolving 3. Technology Is Set to Disrupt All Areas of Wealth Management 4. Human + Machine: The Human Advisor Remains at the Center 5. Communication With Clients Is Changing: It s Interactive, Mobile and Personalized Source: Strategas Investment Strategy Chartbook 11/27/17 21

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27 Disclosure The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this presentation is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. All investments carry a certain risk, and there is no assurance that an investment will provide positive performance over any period of time. The asset classes and/or investment strategies described may not be suitable for all investors and investors should consult with an investment advisor to determine the appropriate investment vehicle. Investment decisions should always be made based on the investor's specific financial needs and objectives, goals, time horizon and risk tolerance. The graphical illustrations do not represent any client information or actual investments; they are not being offered to assist any person in making his or her own decisions as to which securities to buy, sell, or when to buy or sell. Past performance is not a guarantee of future results. The statements herein are based upon the opinions of Envestnet and third party sources. Information obtained from third party resources are believed to be reliable but not guaranteed. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. ADVISOR/PROFESSIONAL USE ONLY - IT IS NOT INTENDED FOR PRIVATE INVESTORS. This document may not be reproduced, altered or posted to any public website without the express written consent of Envestnet. 27